California newspaper defies trend to shrink costs

Updated at: 01/02/2013 8:37 AM
By ELLIOT SPAGAT

(AP) SANTA ANA, Calif. - New and expanded sections to cover business, automobiles and food. A nearly five-fold increase in community news pages and more investigative reporting. Even daily color comics.

It feels like a throwback to an earlier era at the Orange County Register, where a first-time newspaper owner is defying conventional wisdom by spending heavily to expand the printed edition and playing down digital formats.

Aaron Kushner added about 75 journalists and, with 25 more coming, will have expanded the newsroom by half since his investment group bought the nation’s 20th-largest newspaper by circulation in July.

Changes also include thicker pages with triple the number of colors to produce razor-sharp photos and graphics. By the end of March, the newspaper will have 40 percent more space than under previous owners, Freedom Communications Inc.

Kushner, 39, believes people will pay for high-quality news. His bet is remarkable in an industry where newspapers have shrunk their way to profits for years, slashing costs while seeking clicks on often-free websites to attract online advertising.

As more newspapers begin charging for online access, Kushner’s spending spree is drawing close attention.

"If he’s successful, it’s going to show the way for other papers to follow," said Walter E. Hussman Jr., publisher of the Arkansas Democrat-Gazette and an early advocate of charging readers for online access.

Seated behind his large, clutter-free desk near shelves stacked with newspapers, the former Stanford University gymnast said his lack of industry experience may be a plus because he hasn’t been through the tough times in newspapering.

"So when we sit down and look at what’s possible, our view of the world is different," Kushner said. "We’re a little crazy in that we really do believe that we can grow this particular newspaper."

It’s too early to know whether he’s right. Kushner said advertising revenues have grown, though he won’t say how much.

Average daily circulation rose 5.3 percent as of Sept. 30 from a year earlier to 285,088 on weekdays and 387,547 on Sundays, bucking an industry decline of 0.2 percent, according to the Alliance for Audited Media.

One key test will be when the Register begins charging for online access sometime before the end of March. He said readers will pay the same as the print edition _ a contrast to publications that charge online subscribers substantially less.

"If you have a wonderful restaurant and it cost $10 to come in the front door, I’ve never understood why it should cost anything less to come through a side door," he said.

"The value of the journalism isn’t any less. The reporter isn’t paid any less. The photographer isn’t paid any less."

Kushner, who has a master’s degree in organizational analysis, founded a business in the 1990s that allowed people to change their addresses online and later owned and managed a greeting-card company for seven years.

In 2010, he started an investors group, 2100 Trust LLC, to scout for newspapers, flirting with The Boston Globe and later with MaineToday Media Inc., publisher of The Portland Press Herald.

Tom Bell, president of The Portland Newspaper Guild, said Kushner presented the union with 50 demands, including a longer work week and increases in employee health care contributions.

"We got off to such a bad start that it was hard to recover," said Bell, who is skeptical of that Kushner’s print bet will succeed.

Kushner settled on Freedom and its 107-year-old flagship paper, the Register, for an undisclosed sum. The newspaper serves affluent, growing, well-educated and ethnically diverse communities near Los Angeles, bolstered by 24 community publications.

Kushner became Freedom’s chief executive and the Register’s publisher, working five days a week at the company’s Santa Ana headquarters and flying cross-country to his wife and three children in the Boston area.

Many executives stayed put, including the top editor, Ken Brusic, who joined the Register in 1989.

The newsroom is nearing 300 employees, including about 40 year-round interns who are paid $10 an hour and provided housing. The new owners eliminated 401(k) matches at the non-union newspaper and have resisted pay raises.

Like other newspapers, the Register experimented over the last decade as its circulation tumbled 40 percent and the newsroom shrank in half. A tabloid paper featuring snappier stories failed, as did a weekly entertainment publication.

Reporters got ever-rising numerical targets to generate Web traffic, with constant reminders of how they fared against peers. "It was more like a sales floor than a newsroom," columnist Frank Mickadeit wrote in a recent piece hailing the Register’s "reawakening."

To focus more on the print edition, the Register slashed the number of blogs from around 40 to less than a dozen. It scrapped an iPad application for news, traffic and weather.

The new owners have introduced a daily page for coverage of a major development, began sending a reporter and photographer to every one of the region’s 50 high school football games on Fridays and doubled editorial pages.

Reporters have been encouraged to dig deeper and expand sources. "It’s a new experience for (a publisher) to say, `Are you sure you have enough investigative reporters? I think you ought to hire more,’" Brusic said.

The Register’s editorial page _ once a strong libertarian voice _ didn’t endorse for president in November. Kushner has contributed to Democrats such as Barack Obama and Joe Biden and moderate Republicans, including Sen. Susan Collins of Maine.

Kushner declined to discuss his political views and said they are separate from his work at the Register.

He is looking to buy more newspapers, telling Register staff last year that he had a list of 15 that fit his criteria. In an interview, he expressed interest in Tribune Co. newspapers, which include the Chicago Tribune, Los Angeles Times and Baltimore Sun.

Some readers and employees question how much the new owners will stomach if growth stalls. Kushner insisted he is committed, saying the Register has a strong balance sheet and doesn’t answer to shareholders seeking quick returns.

"If you don’t have a clear tangible way to grow revenue you only have one alternative and that’s to cut costs," he said. "That path may well work. That’s not the path that we’re on here."